August 14, 2023

US announces FCPA-related settlements with Colombia-based banks to resolve bribery allegations

On August 10, 2023, the US Department of Justice and the Securities and Exchange Commission announced they had entered into settlements with Corporación Financiera Colombiana SA (“Corficolombiana”), a Colombian financial services institution majority owned and controlled by Colombian conglomerate Grupo Aval Acciones y Valores SA aka Grupo Aval SA, a holding company whose shares are traded on the New York Stock Exchange.  The settlements resolve allegations that Corficolombiana engaged in a scheme to pay millions of dollars in bribes to high-ranking government officials in Colombia in violation of the Foreign Corrupt Practices Act (“FCPA”).  Corficolombiana entered into a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ and agreed to pay more than $80 million to resolve investigations by the DOJ, SEC, and Colombian authorities.  According to the DOJ, this is its first-ever joint FCPA bribery prosecution conducted with Colombian authorities.

According to court documents, between 2012 and 2015, Corficolombiana’s former president conspired with Odebrecht SA, a global construction conglomerate in Brazil, to pay more than $23 million in bribes to Colombian government officials in exchange for a contract to construct and operate a highway toll road in Colombia known as the Ocaña-Gamarra Extension, the largest highway construction project in the history of Colombia.  As part of the scheme, Corficolombiana allegedly caused other companies to enter into fictitious contracts that intermediaries used to make the bribe payments to officials on Corficolombiana’s behalf.  Corficolombiana reportedly earned more than $28 million in profits from the project.  According to the SEC, the bribe scheme was made possible by Corficolombian’s deficient internal accounting controls and books and records that concealed the bribes as legitimate business expenses, which caused Grupo Aval to violate the books and records and internal accounting controls provisions of the FCPA.

The DPA, which was filed in the US District Court for the District of Maryland, charges the company with conspiracy to violate the anti-bribery provision of the FCPA.  Under its terms, Corficolombiana will pay the DOJ a $40.6 million penalty and forfeit $28.6 million, which will be credited against the disgorgement of profits paid to the SEC.  The DOJ also agreed to credit up to half of its penalty against funds that Corficolombiana and its subsidiary, Estudios y Proyectos del Sol SAS (“Episol”), pays to Colombia’s Superintendence of Industry and Commerce (“SIC”).  This credit is contingent upon Episol dropping its appeal of the $25.9 million penalty imposed by the SIC for Colombian anti-trust violations for the same conduct.

The DOJ reported that Corficolombiana’s penalty reflects a 30 percent discount in the amount allowed under the US Sentencing Guidelines because of the company’s prompt engagement in extensive remedial measures, including efforts to overhaul its compliance program and enhance its third-party intermediary risk management process.  Corficolombiana also received credit for its cooperation with DOJ investigators and, more specifically, for sharing information obtained during the company’s internal investigation; providing documents and translations located outside of the US; and providing sworn testimony from relevant witnesses that the government may not have otherwise been able to access.  Corficolombiana also agreed to continue to cooperate with DOJ investigators on this matter and will continue to make improvements to its compliance program.  Throughout the DPA period, the company also agreed to report to the DOJ any further remediation efforts and efforts to implement compliance measures.

In the SEC settlement, Grupo Aval and Corficolombiana consented to a cease-and-desist order which found that both companies violated the accounting provisions of the FCPA and Corficolombiana additionally violated the anti-bribery provisions of the FCPA.  Grupo Aval agreed to pay $40.2 million in disgorgement and prejudgment interest to resolve the SEC’s investigation.